What Happens to Employee/Manager Relations During Challenging Financial Times

The answer to this question is: It Depends!

Based on management’s actions, relations can become worse or they can become better. A good way to understand this dynamic is to look back at the 2009 Great Recession.

A classic ethics and workplace survey by Deloitte LLP concluded that the aftermath of the Great Recession brought about diminished trust and ethics in business. Overall, employee/manager relations became worse. This was a disturbing finding.

Why did this occur?

The survey found that of employees who planned to seek a new job, their top three reasons for doing so were the following:

• (1) Loss of trust in their employer based on how management made decisions during the Great Recession
• (2) Lack of transparency in leadership communication during the Great Recession
• (3) Perception that they were treated unfairly or unethically by their employers over the last 18 to 24 months

Since human behavior is the one thing that remains the same regardless of how long we live on this planet, the findings from this Great Recession hold special relevance to the workplace in the aftermath of the Covid-19 pandemic. Employees now are evaluating if they want to remain with their employers based on how management acted during this global challenge.

In plain words, employees are evaluating whether or not they still trust their bosses and over the long term want to continue to work for them. Your employees are doing the same.

What Works Well During Times of Financial Challenge

The overall finding of this survey of the Great Recession was that management as a whole did not do so well in leading their employees through that difficult time. That wasn’t the end of the story however as some managers did rise to the leadership challenge.

In discussing the survey, Sharon Allen, Chairman of the Board at Deloitte LLP at that time noted the following:

Regardless of the economic environment, business leaders should be mindful of the significant impact that trust in the workplace and transparent communication can have on talent management and retention strategies. By establishing a values-based culture, organizations can cultivate the trust necessary to reduce turnover and mitigate unethical behavior.

The survey also provided some interesting data on the business case for managers taking actions that improve organizational trust.  When asked to rate the top two items that are the most positively affected when an employee trusts his or her employer, employed US adults made the following top rankings:

• Morale (55%)
• Team building and collaboration (39%)
• Productivity and profitability (36%)
• Ethical decision making (35%)
• Willingness to stay with the company (32%)

What You Can Do During Times of Financial Challenge

Looking at the Covid-19 pandemic, while it’s true that management had to make difficult decisions to keep the business doors open, it’s also true that those decisions did not have to be made in such a way that it destroyed trust in their organizations.

The Covid-19 pandemic will not be our last financial challenge just as the Great Recession wasn’t. Should you face another crisis, there are timeless strategies that you can use to sustain a positive relationship with your employees.

These actions include the following:

• Walk your talk. Be ethical in your actions and avoid doing anything that comes off as hypocritical. (Behavior that contradicts what you are telling others to do will quickly undermine your credibility);
• Be transparent. As much as possible, be transparent in your communications. (In the absence of communication from you, your employees may assume the worst particularly when times are difficult);
• Reward the right behavior. Promote and reward ethical behavior that aligns with what you and your organization values. Avoid inconsistencies in your rewards strategy. (For example, if you only reward results while ignoring unethical behavior you will promote organizational cynicism and distrust among some of your employees);
• Show you care. Support your employees during difficult times as much as you can. Promote a healthy career-life fit as possible. (People don’t live to work; they work so they can live).

Clearly building organizational trust is essential to a productive business enterprise. The decline of trust that came with the Great Recession is an important learning takeaway for managers today. The decline shows that your actions as the person in charge matter. And, this is particularly true during difficult financial times when your employees feel vulnerable.

You can successfully navigate the difficulty between keeping the business going and maintaining good relations with your employees by doing the following:

• Walk your talk
• Be transparent
• Reward the right behavior
• Show you care